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DFM to enter administration after sale talks fail

DFM to enter administration after sale talks fail

An asset manager linked to collapsed structured products provider Merchant Capital is set to enter special administration amid "financial difficulties" and following regulatory intervention by the Financial Conduct Authority. 

The FCA has confirmed Reyker Securities has stopped conducting any regulated activities and its directors have taken "immediate steps" to put it into special administration following an unsuccessful attempt to sell the business.  

According to the regulator Reyker had been pursuing an accelerated sales process which fell through last week, but the FCA said the company remains open to potential buyers. 

The FCA said: "Following an application by Reyker, the FCA imposed certain regulatory requirements on Reyker. These requirements place restrictions on Reyker effectively stopping all movement of client money or asset. 

"Apart from in a few specific circumstances, such as receipt of dividend payments, it is not permitted to either receive any new client money or custody assets or to pay away client money or custody assets." 

Reyker is still holding client money and custody assets but the regulator said the company was not currently in a position to return these to customers and, when appointed, special administrators would take on responsibility of the funds. 

In 2013 the company hit the headlines as the former custodian of collapsed structured products provider Merchant Capital, which fell into administration along with its parent Merchant House Group. 

Claims against Merchant Capital reached the Financial Services Compensation Scheme as investors in plans previously held by the provider faced a fresh wave of fees, levied by Reyker. 

At the time Reyker said terms and conditions imposed when it took on the book of business for Merchant allowed it to apply fees to cover any additional expenses incurred.

Shortly afterwards the FCA faced calls to make it a mandatory requirement for custodians to ringfence clients’ fees to ensure that if the custodian goes into administration investors do not have to pay administration fees twice.

The FCA said it is in frequent contact with Reyker. 

A statement on Reyker's website said: "Following an application by Reyker because of financial difficulties, the Financial Conduct Authority has imposed regulatory requirements meaning that: Reyker has ceased to conduct regulated activities except for holding and safeguarding client money and investment assets.

"So that no client is disadvantaged compared to another, no withdrawals or transfers of client money or assets are being processed for the time being.

"Reyker has no reason to believe that there is any shortfall in client money or assets as at 7 October 2019. The directors are taking steps to put the firm into special administration."

rachel.mortimer@ft.com 

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